Diversify with alternative assets kept abroad.
Why investing abroad and keeping part of a portfolio in foreign markets is a good idea? Why alternative assets?
Most investors Worldwide are tied up to a national market, meaning that all the capital they have is essentially under one flag or one government. As a result, if there is a revolution or a national economic crash, most assets under that Nation will be likely to suffer a massive devaluation or a total loss due to the Government asset confiscation or exponential inflation.
Diversification is the best known way to minimize risk in an investment portfolio. Diversification means a portfolio has different types of assets from different industries and markets, strategically selected and divided into risk levels. The strategy is not bulletproof, however, it works and has been the most popular way to preserve investment capital amid successful investors. More powerful than asset diversification alone, is to diversify national markets investing part of a portfolio abroad.
The Venezuela example
10 million dollars in Venezuela’s bolivares in 2011 would be valued today in 2018 at ridiculous $182.98 dollars!
Venezuela, one of the richest countries on Earth, with amazing resources and one of the greatest oil reserves in the planet, is suffering from a Socialist revolution that has been impoverishing the country and its people to extreme levels for the last 10 years. Now imagine a wealthy individual in Venezuela around 2011, with an excess of 10 million dollars in Venezuelan assets, national equities, real Estate, businesses and cash. Then suddenly the socialist oppressive Government began an aggressive intervention in the economy, triggering a chain reaction of uncontrolled exponential inflation and currency devaluation. Before you could realise what was going on, in less than a decade, the high net worth individual’s fortune of more than 10 million dollars would be valued in today’s exchange of 2018 at ridiculous $182.98 dollars!
From millionaire to impoverished in less than 10 years in currency value, not considering any gains or losses due to other circumstances during that period. It’s a massive destruction of capital that no family can survive!
We are sorry for the Venezuelans and their National peril, and we hope they can somehow recover from this economic meltdown.
The curious thing is, Venezuela is not an isolated case and almost all Nations on Earth have experienced one time or another a massive economic deterioration with high inflation and destruction of national asset value. Some countries have experienced that several times over in modern times, many of them in Latin America.
Now imagine that the same wealthy individual in 2011, with a net worth over 10 million dollars in Venezuela, had a diversified portfolio with assets abroad. Imagine for example this individual had 15% invested abroad in foreign properties, in an international stock market and allocated gold in Switzerland. Let’s say for the sake of this example that the assets abroad would have valuated only 5% per year, during the period of 2011 to 2018. In today’s value, the individual’s net worth asset abroad would be valued at more than 2.5 million dollars, or 25% of the initial net worth 10 years prior.
In 4 January 2011, the bolivar had a fixed exchange rate at 4.30 bolivares for 1 dollar, today as of 23 March 2018 in the Venezuela’s free market, 1 dollar is valued at 235,002 bolivares! That is more than 99.998% devaluation of the bolivar against the dollar.
Don’t leave all your eggs in one basket or one national market for that matter.
Why alternative investments?
Escape local governments regulations and taxes trap net
Having an exposure into internationally held alternative assets makes sense, especially when they are less likely to be regulated or taxed by local governments.
Low correlation to the traditional investments
Alternative assets have low correlation to traditional investments, therefore reducing volatility in a portfolio and possibly increasing return.
What to invest?
Here are some of the most popular starter choices as diy when comes down to assets abroad. For more professional money management we have other recommendations and consultants for guidance.
Gold – A must for all investors!
Gold is the foundation of any health portfolio! Be your own central Bank, have Gold strategic reserves. Hedge your wealth with allocated physical Gold in international metal Banks located in strategic secured locations across the World.
International properties – Your home and Real Estate abroad.
Properties abroad are not only investments but secondary homes, as a Global citizen having bases in your places of choice is strategic sound. Properties abroad are likely to have a different correlation with the domestic properties market, they work as a hedge to other Estates elsewhere.
International properties are not just investment, but it can also be your ticket to permanent residency and eventually lead to a second nationality in favorable countries.
Foreign stock markets – Technical but rewarding.
Investing in international stock markets it is not complicated, today there are countless brokers operating in all major markets across the World. Investing in foreign markets can be tricky and time consuming, it also require a good knowledge of the stocks and the local market.
Cryptocurrencies – Not for the faint of heart!
Cryptocurrencies, as we said is the latest asset class in the financial block. It is risky, very volatile, full of mistrust in hackers, but can be tremendously profitable when done properly, for example in 2017 many top cryptos had between 1000% to 5000% valuations, yes MASSIVE PROFITS!
Most cryptos are based on Blockchain technology which is here to stay, there are now 1000’s of different cryptocurrencies with infinity different applications that will definitely revolutionize the way we do things in all areas. Most crytpos however are expected to fail, but few should return tremendous returns in the future.
So if you chose to invest into cryptos, inform yourself and only invest what you can afford to lose.
Allocated Gold account.
Everyone should have some savings or strategic capital reserves at their disposal, in fact capital reserves is a foundation of any sound portfolio. It primarily act as a wealth hedge for unforeseen circumstances, it has been proved countless times over history to be the difference between recovery and total financial disaster. Nothing makes more sense than have some capital in international allocated Gold banks, strategically chosen for its fair laws, safe environment and universal recognition as free exchange markets.
Work with the best! In the World there are two unique high quality services that standout as far as reliability and quality of services, they are Goldmoney and Bullionvault. With vaults in key strategic places around the globe these companies offer allocated physical Gold, Silver and other precious metals to be purchased and stored on investors behalf and convenience, all audited by international well known organizations. All allocated assets are guaranteed with contracts of ownership recognized Worldwide, and redeemable at any time under request in cash funds exchanged or physical form.
Goldmoney is the easiest way to invest in physical gold and silver bullion online. We safeguard nearly $2 billion of assets for clients in 150 countries.
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BullionVault lets private investors around the world access the professional bullion markets. You can benefit from the lowest costs for buying, selling and storing gold and silver.
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Cryptocurrencies are the latest asset class on the block. Cryptos promises to change the way we do business utilizing block-chain, in a nutshell block-chain is a decentralized ledger that makes record transactions and processes automatically without the need of a central control, and for that reason impossible to temper with. The idea is simple, but the applications can have a tremendous impact in all industries, specially in the financial World. For that reason Wall-Street and governments are nervously watching on the sidelines the developments on the crypto sphere.
Due to its minuscule size market, cryptos experienced a massive growth from November of 2017 where the total capital into the crypto market grew from 125 billion to a staggering 825 billion in 2 months, a 560% growth! Follow by a massive sellout in January of 2018, from 825 towards 270 billion, a 67% correction, never the less this market is bound to grow exponentially in the coming years, some analysts in Wall-Street predict that the crypto market can easily surpass 3 to 5 trillion in the next 3 to 4 years. It is in deed a fantastic exiting market to be in, but investors have to be aware of the cryptos volatile nature, however smart money is considering cryptocurrencies a must have asset in a portfolio, with a 0.5% to 3% conservative exposure.
Binance is the biggest cryptocurrency exchange in the World. It supports all devices and multiple languages, offering a seamless user experience. Binance is capable of processing 1,400,000 orders per second, making it the fastest exchange in the market today.
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Coinbase is the world’s most popular way to buy and sell bitcoin, ethereum, and litecoin. It supports more than 32 countries, it has more than 10 million customers and it has exchanged 50 billion plus so far.
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